​Lowest Chinese economic growth in 24 years

The economic growth of China in 2014 dropped to its lowest level since 1990 with the country just failing to reach the official annual growth target of 7.5 percent for the first time in 16 years.

China's GDP growth at the end of 2014 was 7.4 percent, the
country’s worst performance since the 3.8 percent growth in 1990,
the year after the suppression of pro-democracy demonstrations in
Beijing's Tiananmen Square followed by Western sanctions.

The country’s GDP reached $10.4 trillion (63.646 trillion yuan)
and is the lowest since 1998, the National Bureau of Statistics
reported Tuesday.

Although China didn’t manage to achieve the performance target
fixed by the government for 2014, the annual growth figures still
outran the market expectations of about 7.2 percent, according to
Reuters.

Chinese stock markets rose on the news, following Monday’s fall
of 7.7 percent, its biggest loss in more than six years.

At the same time, the authorities are optimistic about the
development of China's economy. The government says this level is
enough to find jobs for the country’s enormous population.

"The economy maintains a steady growth in the ‘new normal’, with a positive trend of stable
growth, structural optimization, the improvement of the quality
of growth and social well-being", said the Bureau’s
spokesperson Ma Jiantang.

Economists expect the slowdown of 2014 to result in an extended
economic downturn. On Monday, the IMF forecast 6.8 percent growth
for China in 2015, a number below the 7 percent target economists
expect Beijing to set.

The slowdown in China
comes as the world economy shows vulnerability to regional
economic changes. The eurozone risks plunging into a third
recession in six years, and Abenomics has proved ineffective as
Japan continues to remain in stagnation.

China's economic slowdown is also triggered by domestic factors
such as a drop in real estate prices, with a property sector
accounting for 15 percent of GDP. High total debt is a major drag on
the expansion of China’s economy.The country’s overall borrowing
is growing faster than the economy, with the debt to GDP ratio
exceeding 250 percent.Falling energy prices, industrial
overcapacity and a lack of demand can lead to the potential onset
of a deflationary cycle.

If these issues aren’t resolved in time, China could find itself
in a similar situation to Japan, and this is a reason why Beijing
may need to tie more money into the system.

However, some experts believe the slowdown that is happening amid
global stagnation is a natural thing, as China’s has experienced
rapid growth for more than three decades in a row.